It's been extra challenging to find new takes on our financial crisis that are accessible, interesting, entertaining, and educational. This article from the Atlantic Monthly qualifies on all counts. (Hat tip to John F. for pointing this one out). It's long but it is worth it. If you don't want to plough through it here are some of my favorite excerpts to entice you to read the whole thing:

I haven’t depended solely on Merrill Lynch for advice. I believed I could find investments for myself. I stayed away from mutual funds because I couldn’t figure out who ran them. And I applied Warren Buffett’s famous dictum—Don’t buy something you don’t understand—to my trading, so I bought, in our Merrill Lynch account, such companies as Johnson & Johnson and Procter & Gamble and Illinois Tool Works and Caterpillar, and these have been kind to us, until now. (I also bought the Internet company Ariba, because I heard about it from a guy who heard about it from a guy. It went up to about $1,000; I didn’t sell, of course, and now it’s at $8.) And every so often, I would follow the recommendations of the financial magazines, SmartMoney in particular, because for a long while I was an ardent consumer of financial pornography. No more. In the harsh light of recession, I find it hard to believe I listened to a magazine that, in August 2007, recommended American Express at $63 a share (a “conservative way to make hay from global credit-card growth”), which as I write this is selling for $13 a share; Wynn Resorts, $94 then, $20 now; HSBC, $93 then, $25 now; Washington Mutual, $36 at the time, seized by the government last September—rendering the stock worthless.

IT TURNS OUT that my crucial mistake was believing that the brokers and wealth managers and cable-television oracles who make up the financial-services industrial complex actually had my best interests at heart. Or so say the extremely smart—and wealthy—people I asked to help me figure a way out of my paralysis.

One of these people was Robert Soros, the deputy chairman of the fund started by his father, George. I went to see him at his office, where he spent two hours performing an autopsy on my assumptions.

“You think a brokerage should be a place you go to pay commissions for fair and unbiased advice, right?” he asked.

“Yes,” I said.

“It’s not. It never has been.” He then cited another saying of Buffett’s: “‘Wall Street is a place where whatever can be sold will be sold.’ You are the consumer of their dreck. What they can sell to you, they will sell to you.”

“But they told us—”

“They lied.”

He went on: “You should be disheartened and disappointed. But don’t kid yourself. You’re a naive capitalist. They were never your advisers. Do not for a moment think that a brokerage firm is your friend.”

“So who’s my friend?”

“You don’t have one. This is the market.”

“Okay, that’s Merrill Lynch. What about the others?”

“They’re not your friends,” Soros said patiently.

“What about Chuck Schwab?”

“All brokers move products based on volume and commission,” he said.

I had a benevolent, advertising-induced understanding of Schwab. It was the billboards: “I’ve got a lot less money. And a lot more questions. Talk to Chuck.” And: “It’s not just money. It’s my money. Talk to Chuck.”

I thought that perhaps Schwab, a discount broker, might be able to answer the question Soros could not: Why had my full-service financial adviser stopped calling me?

I did what I was told, and called Chuck. His spokesman intercepted the call. I explained that I was trying to understand the role financial advisers play in the life of the small investor, but the spokesman, Greg Gable, said that Chuck would not, in fact, talk.

“We’re not going to be able to help you out,” he said.

....

But then I thought, This is Bill Ackman standing before me. He’s a great investor. Maybe he can give me some advice.

So this is what came out of my mouth: “What do you tell the ordinary mortal—say, the person who works in the press that you talked about—what do you say to the person who has $20,000, $50,000, $100,000, or $200,000, maybe, parked somewhere doing nothing? What is your advice right now for that person?”

I looked around. The wizards in the room were having difficulty calculating figures of such humble size. I had thought $200,000 sounded like a large and unembarrassing number. But the room reacted as if I had asked, “Bill, I have 75 cents in my pocket. Do you think I should buy Twizzlers or a big red gumball?”

....

THE WAY I SEE IT, it’s all a con game,” Cody Lundin was saying. “What I mean is that Wall Street has always been an illusion. Now it’s an illusion that’s crumbling. Wall Street is like someone who’s having heart trouble. It’s in constant need of resuscitation, but after a while, it just doesn’t work anymore. People think that Bernard Madoff was unique, that he was an illusion, but he’s just an extension of the same illusion, the same con game. This is one of the reasons I don’t like to have any debt. When you have debt, you become part of this illusion, and sometimes you get trapped by it.”

I asked Cody how he invests his money. “I don’t believe in the intangible economy; I believe in the tangible economy. When I have extra money, I buy tools, food, or land. I like to be able to see what I’m buying. And I really don’t like debt, so I’d rather not have certain things than be in debt to anyone. I just feel better knowing that I don’t owe money, and I feel good knowing that I can take care of myself. That’s the American way, to be able to be self-reliant.”

For the record, I don’t think the grid is buckling under the weight of consumer debt or the mistakes of AIG. But we’re in a strange moment in American history when a mouse-eating barefoot survivalist in the mountains of Arizona makes more sense than the chief investment strategist of Merrill Lynch.

“People need a plan, they need skills, and they need supplies. What would happen if the ATMs stopped working for a couple of days? People would panic. But you won’t panic if you’re prepared to ride out a disturbance.”

....

(Seth Klarman) agreed with Robert Soros that the financial-services industry treats the small investor not as a client but as a source of ready cash. “The average person can’t really trust anybody. They can’t trust a broker, because the broker is interested in churning commissions. They can’t trust a mutual fund, because the mutual fund is interested in gathering a lot of assets and keeping them. And now it’s even worse because even the most sophisticated people have no idea what’s going on.”

After 15 years of pabulum, I was enjoying, in a perverse sort of way, receiving straight talk from masters of finance.

As a motivational speaker and executive coach, Caroline Adams Miller knows a few things about using mental exercises to achieve goals. But last year, one exercise she was asked to try took her by surprise.

Every night, she was to think of three good things that happened that day and analyze why they occurred. That was supposed to increase her overall happiness.

"I thought it was too simple to be effective," said Miller, 44, of Bethesda. Md. "I went to Harvard. I'm used to things being complicated."

Miller was assigned the task as homework in a master's degree program. But as a chronic worrier, she knew she could use the kind of boost the exercise was supposed to deliver.

She got it.

"The quality of my dreams has changed, I never have trouble falling asleep and I do feel happier," she said.

Results may vary, as they say in the weight-loss ads. But that exercise is one of several that have shown preliminary promise in recent research into how people can make themselves happier — not just for a day or two, but long-term. It's part of a larger body of work that challenges a long-standing skepticism about whether that's even possible.

How, then, do we live in this world?
How can we gain? What can our goal be?

For God's sake, don't have a goal in this world.
It's going to beat you bloody.

Where is the goal? The goal is inside.

When you turn back inside, you have your goal, you have your completeness, you have your fullness and you walk through the world, having all else added unto you.

(From The Tao Of Spirit by John-Roger, DSS)

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Good stuff from author and historian Niall Ferguson today. Some excerpts below but the whole interview is definitely worth a read here.

“...this isn't a recession. This is something really quite different in character from anything we've experienced in the postwar era. That's why these projections give positive numbers for 2010. That's the default setting. And it just seems to me ostrich-like, to bury one's head in the sand and assume this has to end this year because, well, that's what recessions do.

“It's obvious, surely we know by now, that this is something quite different. It's a crisis of excessive debt, the deleveraging process has barely begun, the U.S. consumers are not going to suddenly bounce back and hit the shopping malls just because they get a tax cut. The savings rate is going to continue to rise. These processes have tremendous momentum that quite clearly differentiates them from anything that we've seen, including the early 80s, including 73, 74, 75. Those big crises, the ones that we have lived through, were bad. But this one seems certain to be deeper, and more protracted.

“The truth about the crisis is that it is in large measure psychological. We're not dealing here with mathematics. We're not dealing here with human beings as calculating machines. We're dealing with real people whose emotions influence their individual decisions, and the swing from greed to fear is a very spectacular thing when it happens on this scale.

“I've been talking a while about this being the Great Repression. It took ages, ages, for people to realize this thing had fallen apart.”

“Our view is the economy will continue to deteriorate sharply and then I think you will have a weak 2010 although I don’t think it will keep declining…I think 2011 will show some growth but still be well below the levels of 2006 and 2007. My own view is you may not get back to 2006 and 2007 for a long time because we have sort of an emotional and psychic shift going on in America which is back to basics, don’t live on leverage, live within your means, more humble life styles, less extravagant consumption, savings, and all of that sort of stuff.

“I believe that a lot of people in America are legitimately scared and have seen their life savings or what they perceived as their net worth largely either wiped out or cut in half. That’s going to forge fundamental behavioral differences and that will retard the growth.”

God is intention. When you tithe you make God your abundant focus. God’s intention is in that focus, so God will know right whereto find you.

(From God Is Your Partner by John-Roger, DSS)

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If you have money to invest and you are confused as to the best place to put it, you are not alone. Richard Russell of Dow Theory Letters gives as good a summary below as I have seen:

So what's the answer to the current unprecedented situation? What should you and I do?

Don't be married to any specific scenario. Anything may happen in response to the current situation.

The best survival plan is to be diversified. Nobody knows who or what will be "the last investment standing." Will it be Treasury paper, high-grade bonds, real estate, diamonds, T-bills, cash, top-grade corporate stocks or gold?

T-bills are the choice of many sophisticated investors. But T-bills are denominated in dollars, and dollars are vulnerable as are bonds or any other items denominated in Federal Reserve notes ("dollars").

Real estate and diamonds represent intrinsic wealth, although they are not instantly liquid, meaning that they cannot be instantly turned into cash.

Gold has been accepted as wealth for thousands of years. When all other forms of supposed wealth crashes (deflates) or becomes suspect, the last wealth asset to stand will be gold. Gold has no counter-party nor has it any debt aligned against it. Gold needs no central bank to ensure its acceptance. Gold is accepted everywhere and in any quantity as a form of indestructible, eternal wealth.

Gold's problem is that it must compete with the fiat paper that is manufactured by the world's central bankers. Gold is the bankers' enemy. Nevertheless, for survival purposes, it makes sense for every investor or family to own at least a small (10% of assets) position in gold. Remember, you don't own gold in the hope of a potential profit, you own gold as a store of wealth -- as a safe haven asset.

Today, investment money is so suspicious of the viability of any given asset that they are placing their money in an item that bears the full faith and credit of the US government -- I'm referring to Treasury paper. The shortest-maturity is the 91-day T-Bill, yielding literally nothing. Yet if one places one's money in a T-bill, it is thought that this is as safe a place for storing wealth as you will find. Actually, one major worry with T-bills is a possible collapse of the dollar.

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My own point of view regarding the above is to not try and be an investment genius. Just do your best to preserve your hard earned money without risking it unnecessarily. The biggest losses I have seen people make were those where they tried making high returns. Of course, some succeed. But the real "successes" were the financiers/money managers who just took their percentages off the top regardless if the investment did well.

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I love Tim Price of PFP Wealth Management. Here are excerpts from his latest newsletter where he writes an open letter to the Western banking establishment. It's hilarious and scathing.

I would also be grateful if the strategists and economists who work for you could abstain from publishing their unsolicited opinions about resolving the banking crisis within the financial media. I am sure you will agree that hearing from the same strategists who worked for the architects of such widespread financial destruction is likely to irritate those of us who were not actually complicit in the extraordinary and venal credit boom of the last several decades. There is an expression that if you're not part of the solution, you're part of the problem. Those of your employees who were the public face of the problem are, I think you will agree, unlikely to represent the solution, unless perhaps they are fired - en masse, from a giant howitzer, into an area where they can do no further harm. Alaska, perhaps. I would further suggest that the high profile commentators who work for you and who have implicitly played their part in marketing and then amplifying this catastrophe might consider quietly entering another field with superior ethics and enhanced value to society at large: perhaps as piano players in brothels.

Perhaps you, like I, find it richly ironic that members of the public still use your investment subsidiaries as a means to protect and grow their private wealth. I think you should promote the activities of these subsidiaries more widely. My idea for an advertising slogan: “When it comes to moral hazard, we’re Number One. We helped trigger the biggest financial and economic collapse in history through our imprudent lending and investment. Between 18 million and 30 million jobs throughout the world are almost certain to be lost. And more than 50 million jobs throughout the world are now in jeopardy. As a result of our investment expertise, we’ve lost billions, and those of us that still exist and aren’t owned by the taxpayer are technically insolvent. Now, how can we help you with your finances ?”

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Regarding the last point above I have been reading Barron's roundtable of experts as they make their financial predictions the coming year. They are twelve of the most erudite financial minds you are like to find gathered in one place with the most astute observations. Then you read how they did last year and find that they ALL lost gobs of money--most over 50% and some 80%.

My point is don't be ashamed of feeling ignorant. No one really has a handle on our current situation. Just do your best and follow the spiritual principles of abundance and prosperity.

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And if you are a cat lover then forget about all the financial woes and look at these superb photos. (Thanks to Betsy for this).

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When I first mentioned frugal living I got feedback that this was "poverty consciousness." Well, in yesterday's Financial Times I found this:

Toyota, the world’s largest carmaker concluded recently that in the US “frugalism is the new cool.” according to Bob Carter, brand head in the country.

The true Joyful Givers can ask God from their heart to send healing to the world. They have the contact with Spirit, for these are the ones who are amassing themselves on God’s side through tithing as a demonstration.

(From God Is Your Partner by John-Roger, DSS)

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A must read article from Thomas Sowell of The Washington Times on the stimulus program. Excerpt:

Spending money for infrastructure is another time-consuming way of dealing with what is called an immediate crisis. Infrastructure takes forever to plan, debate and go through all sorts of hearings and adjudications, before getting approval to build from all the regulatory agencies involved.

Out of $355 billion newly appropriated, the Congressional Budget Office estimates only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010.

Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.

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Here is more sobering reading from top opinion writer at the New York Times, David Brooks.

Excerpt:

Throughout 2008, Larry Summers, the Harvard economist, built the case for a big but surgical stimulus package. Summers warned that a “poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured.” So his proposal had three clear guidelines.

First, the stimulus should be timely. The money should go out “almost immediately.” Second, it should be targeted. It should help low- and middle-income people. Third, it should be temporary. Stimulus measures should not raise the deficits “beyond a short horizon of a year or at most two.”

Summers was proposing bold action, but his concept came with safeguards: focus on the task at hand, prevent the usual Washington splurge and limit long-term fiscal damage.

Now Barack Obama is president, and Summers has become a top economic adviser. Yet the stimulus approach that has emerged on Capitol Hill abandoned the Summers parameters.

In a fateful decision, Democratic leaders merged the temporary stimulus measure with their permanent domestic agenda — including big increases for Pell Grants, alternative energy subsidies and health and entitlement spending. The resulting package is part temporary and part permanent, part timely and part untimely, part targeted and part untargeted.

But they’ve created a sprawling, undisciplined smorgasbord, which has spun off a series of unintended consequences. First, by trying to do everything all it once, the bill does nothing well. The money spent on long-term domestic programs means there may not be enough to jolt the economy now (about $290 billion in spending is pushed off into 2011 and later). The money spent on stimulus, meanwhile, means there’s not enough to truly reform domestic programs like health technology, schools and infrastructure. The measure mostly pumps more money into old arrangements.

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PK: More on this over the weekend. I think you know where I am going with this.

To receive you must be active. Keep in mind your purpose. You will receive in direct proportion to your clarity of vision, your definiteness of purpose, the steadiness of your faith, and the depth of your gratitude.

--John-Roger, DSS

This excellent quote offers a road map to abundance. I want to particularly bring your attention to “clarity of vision” which we have been talking about, albeit in round about ways, this last week. Please continue to shape your vision for your seed, and then we will take the next step.

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The hilarious The Onion came up with an excellent piece on devaluations and the dollar in November 2005, which still holds up today. Excerpts:

Although the value of the U.S. dollar has fallen steadily against the Lithuanian nail and the Estonian crab apple since early this year, many financial experts had predicted that it would hold its own against the acorn.

"The inedible dollar simply does not offer the same long-term security or short-term benefits as the acorn," said James Aucker of the Commodity Futures Trading Commission. "It is even falling against the Costa Rican pocket, the Latvian thimble, and the German Kinder Surprise Egg, which combines delicious chocolate with a fun, easy-to-assemble toy."

Despite the dollar's ongoing depreciation, it has still made significant gains on Congolese human life, which after late trading dropped to U.S. $1.2826.

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Financial Quote of the Dayfrom the excellent Tim Price of PFP Wealth Management:

Ronald described government as "like a baby. An alimentary canal with a big appetite at one end and no responsibility at the other."

Where we stand today, a problem caused primarily by the unconstrained greed of the private sector is now being addressed by the dubious intentions of the public sector. History suggests it will not be handled well.

When money is spent, it can only be under one of three conditions. You can spend your money on yourself. You can spend your money on other people. Or you can spend other people's money on other people. This last version is the very definition of government spending.

Tim goes on to offer the following piece of advice:

Indeed the trick in 2009 will be to treat equities like bonds, as primarily income-generating assets (and something has to replace those deposit accounts at dodgy banks, which is to say all of them). So if the stocks in your portfolio are unlikely to maintain their dividend, or worse still don't even pay a dividend, you would be well advised to eject them with extreme prejudice.

I went to the Apple Store at the Grove in Los Angeles yesterday. I was looking at the new Mac Pros. My Mac is 5 1/2 years-old and I am at the point where it is prudent to get a new one. When enquiring about he anti-glare option for the 17” laptop and remarking that I didn’t like the glossy screens, the assistant said, “Why don’t you guys trust us?”

I like Macs, a lot. But the idea of trusting ANY corporation suddenly seemed so absurd to me that I was speechless. I have covered trust before in these posts (go to tag on right). My reaction made me realize the cultural shift that has taken place in the last six months.

So the first sign of the times is this bit from Laura Rowley on Culture Shift: Top Trends for 2009. Her number 5 is the death of trust.

The Death of Trust

Finally, as Warren Buffett once said, "Trust is like the air we breathe. When it's present, nobody really notices. But when it's absent, everybody notices." That giant sucking sound you hear is the American investor, gasping for breath.

The lessons of the subprime mortgage debacle and the Madoff scandal are clear: Understand where and how your money is invested. Know the policies and fees of your bank, insurer, credit card company, and 401(k) service provider, because there will always be an inherent conflict between your goal -- building wealth -- and the goals of companies and advisors that earn money on your wealth.

In a recent op-ed, 'The Wall Street Journal' suggested that "capitalism runs on trust." But the truth is, capitalism runs on self-interest.

No broker will present you an investment or mortgage product without thinking of his or her commission. No rating agency will value the truth about an investment over the firm's profitability. No government agency chief or member of Congress will protect the individual investor from the abuses of financial services companies without pondering the impact on his or her future employment or campaign contributions.

And no Treasury bailout czar will demand accountability for hundreds of billions of your tax dollars being showered upon the drunken captains of industry who ran the ship aground to begin with. As a Government Accountability Office report noted in December: "The standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments."

If there is an object lesson that will shape this generation of savers and investors, it's one of betrayal. Capitalism runs on self-interest. Guard yours carefully.

“I’m working again in New York with a monster commute, so I count the two miles of walking I do every day to and from work as part of my fitness routine. I walk very fast and run up stairs.”

Why pay money to join a gym when you can climb stairs instead?

Is this cheap approach to fitness enough to keep me healthy?

The answer appears to be yes. People get the most health benefits from between 150 and 300 minutes per week of activity, says David Fein, medical director of the Princeton Longevity Center in New Jersey. But that workout can be done in little bits and pieces through the day. And it doesn’t have to be structured exercise at a gym.

Dr. Fein, who’s 50 years old, also follows a regime of walking and sprinting. Sprinting, a form of interval training, boosts cardiovascular fitness for reasons doctors don’t completely understand, he says. (Men over 35 and women over 45 should get a stress test before doing it.)

The Cooper Clinic in Dallas, founded by Kenneth Cooper, the doctor who coined the term “aerobics,” has a similar message. “What we’ve done is systematically remove physical activity throughout the day from our daily existence,” says Tedd Mitchell, the clinic’s president. “People mistakenly think to become fit we have to become rats on the wheel at the gym.”

Dr. Mitchell, 46, and his wife jog 2.5 miles every morning at a slow 10-minute-per-mile pace with their dogs. And Dr. Mitchell, a former competitive swimmer, swims most afternoons. But he says most people are more likely to get fit by moving throughout the day.

He advises people to get a pedometer, which measures how many steps you take. The average person does about 3,000 a day. Dr. Mitchell tries to get them to double that and builds from there. The lion’s share of benefits are achieved with fewer than 10,000 steps.

2) Bear Market in Gadgets

The Consumer Electronic Show used to exemplify consumer spending at its most decadent. Now there are vacant hotel rooms, preemptive yawning, less floor space taken up by fewer presenters. Even the employed are having a hard time getting jazzed about throwing thousands of money into depreciating gadgets.

3) Money Managers Exposed

Want more proof that 2008 was an abysmal year? Morningstar’s “fund manager of the year” only lost a fifth of his clients’ money.

The Chicago-based fund research company gave the nod to Charlie Dreifus, manager of Royce Special Equity, in the domestic equity fund category. He’s down 19.6%, compared to 37% for the market. In this meltdown, that’s an excellent result. (Tom Forester, the only American mutual fund manager to post a gain this year, was up only 0.4%.)

True, these Oscar-style awards don’t mean a lot. Last year’s winner, Will Danoff at Fidelity Contrafund, got smoked in 2008 along with the market. He lost 38%.

Morningstar’s international stock fund managers of the year are David Samra and Daniel O’Keefe at Artisan International Value. These chaps lost a mere 30% while the average small and mid-cap foreign fund lost 46%. They are also conservative investors, and the fund is also concentrated: They place their bets on about 50 higher-conviction stocks, says Morningstar.

Last year’s international stock manager of the year, Harbor International, fell 43%.

When one person becomes free of materiality, it’s like an infection going the other way. Instead of greed affecting honest people, honest people start affecting the greedy. You let go and give to God, joyfully and unconditionally. With people who say, “I don’t have enough to tithe,” I say, “Don’t tithe,” because their feelings of lack are telling them that they’re going to need it. And with that attitude, they won’t have enough anyway. Because they’re hanging on, God can’t supply them with more. They’re holding on to it, scared to death about letting go of it. However, if they let go, they can rise to new heights inside themselves and get freer.

(From God Is Your Partner by John-Roger, DSS)

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If you are like a lot of folks and are looking for a book that explains financial and investment matters in an accessible, easy to understand way, The Shortest Investment Book Ever, by James O’Donnell may be for you. I haven’t read it myself but this review was helpful and I intend to buy it. Excerpt from review:

The entire book has a feeling of a conversation, almost one on one with O’Donnell. It begins with him explaining the realities of retirement and investing. The realities of retirement today is that you cannot depend on Social Security, you will run a significant risk of outliving your savings, and you will also likely underestimate how much you will spend while in retirement. Those are just three of several reasons he cites and those are well understood ideas in the financial planning world, they’re just not well understood by many outside of that world.

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Read here if you don’t know the difference between a Money Market Fund and a Money Market Account and if you want the best rates on where to park your money in relative safety (FDIC insured). Excerpt:

In the world of banking products, you are always trading off interest rate for flexibility.

Typically the higher the interest rate, the less flexible the account. Take CD rates for example, they are often higher than savings accounts and they are less flexible. You decide how long you’re willing to keep your money locked up and then pick a bank that offers the best rate for that term. If you wish to get your money early, you pay penalty. On the other end are checking accounts.

Checking accounts have the worst interest rates but offer the most flexibility. You can get your cash whenever you want it, write as many checks as you’d like, and visit your own ATM without penalty. For that flexibility, you earn very little, if any, interest.

Where does that leave money market accounts?

Money market accounts are like a hybrid between checking and savings accounts.

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If one of your New Year’s Resolutions is to spend less money in 2009, you’ll do well to follow this sage advice from The Simple Dollar. Excerpt:

Focus on just one aspect of your spending at a time. Much like a diet, many people tend to dive into cutting spending with a short-term religious-like fervor, cutting every dime of frivolous spending.

Much like a diet, this works wonders in the short run. Your spending drops significantly and you feel really good about it. Eventually, though, you begin to feel the resistance - and eventually, you lose your grip and fall back into most of those old routines. Right back where you started.

Instead of attacking fifteen different bad habits at once, though, just focus on one bad spending habit.
Do you buy a coffee every morning? Focus on nothing but cutting down (or cutting out) that cost.
Do you often stop at your favorite store and spend more than you should? Focus on cutting down on those trips. And let everything else go. Don’t try to make radical changes in other aspects of your life. Just cut down on this one thing.

In fact, many of us are just rushing into it, arms and hearts wide open, full of love, and knowing that not one thing is coming our way that we can't handle.

The Christ Within & The Disciples of Christ by John-Roger, DSS

A nod to Lisa. Love that last line.

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I liked this quote from a reader of Fuller Money Daily Comment.

As the boomers begin to sell off assets to use for retirement this will put most assets on offer...while, the next generation (that's me) is ill prepared to purchase them. We have been thru stock market bubbles, housing bubbles, and now a credit bubble. There is clearly no pent up demand for speculation in this generation. They have played and lost. Repeatedly. I envision some downsizing and saving which should put a lid on most longer term rallies.

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No More Lies?

Had enough of lying and deceit by those in positions of power? Read this. New Year’s resolution anyone? Who among us is going to throw the first stone?

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I wish Tom Friedman was right but I really think the system has to fall before it can be rebuilt on a new solid foundation. Excerpts:

For all these reasons, our present crisis is not just a financial meltdown crying out for a cash injection. We are in much deeper trouble. In fact, we as a country have become General Motors — as a result of our national drift. Look in the mirror: G.M. is us.

PK: Agreed

That’s why we don’t just need a bailout. We need a reboot. We need a build out. We need a buildup. We need a national makeover. That is why the next few months are among the most important in U.S. history. Because of the financial crisis, Barack Obama has the bipartisan support to spend $1 trillion in stimulus. But we must make certain that every bailout dollar, which we’re borrowing from our kids’ future, is spent wisely.

It has to go into training teachers, educating scientists and engineers, paying for research and building the most productivity-enhancing infrastructure — without building white elephants.

Generally, I’d like to see fewer government dollars shoveled out and more creative tax incentives to stimulate the private sector to catalyze new industries and new markets. If we allow this money to be spent on pork, it will be the end of us.

PK: The money will mostly go to the people who got us into this mess in the first place. Fraud is endemic in the system. I was going to begin the sentence with “sadly.” But why should I say sadly when from a spiritual perspective it is all perfect. Last night driving home, I recalled what J-R had said at the booksigning in San Francisco when asked about these times. As I remember it he said that sometimes things have to be at heir worst for us to be at our best. Maybe that is this blog’s new mantra.

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An Amazon reader's review on Michael Pollan’s book In Defense of Food.

In all this, Pollan insists that you have to save yourself. And he makes a good case why. Our government, he says, is so overwhelmed by the lobbying and marketing power of our processed food industry that the American diet is now 50% sugar in one form or another --- calories that provide "virtually nothing but energy." Our representatives are almost uniformly terrified to take on the food industry. And as for the medical profession, the key moment, Pollan writes, is when "doctors kick the fast-food franchises out of the hospital" --- don't hold your breath.

Seems like saving ourselves is going to be a theme for the next few years.

The money madness continues---$100 billion of wasted projects in Iraq (NY Times) and $50 billion investment fraud (“Now we know how he made those returns. It was a Ponzi. Except this may have been larger than Enron and ultimately more damaging to more people than any scandal in the past,”)—which means that we must stay spiritually sane. And the best way I know to do that is to turn to the teachings. Here are some quotes I pulled from The Way Out Book by John-Roger reminding us that this world is all an illusion.

As long as you believe in and give power to the illusions of this world, you will get caught up in them. This isn’t bad; it may be that the cause and effect with which you are dealing is going to hold you into the earth plane for a few more lessons, for a few more experiences. Love them. The key to breaking free is to love yourself and to love each experience that comes to you whether it appears to be negative or positive. Love it all equally.

This one made me laugh:

You can love people and not have them all in your front room. You can love them in their front rooms.

Here are a couple more:

The Soul is your truest reality. All lower levels are illusionary and transient.

It has often been said that it takes great courage to see the face of God. And this is true because you must see past all the illusions of the lower levels to see the face of God. You must see past the conditioning of this world and this society. You must see past the illusion of your own senses. You must see past your own dilemmas. God is present in everything. God is entirely present, all the time. Your dilemma is your misunderstanding of the absolute “hereness” and “nowness” of God’s presence. And in your misunderstanding, you give yourself over to negative power, to the dilemma.

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Okay, now you are spiritually sane you can look upon the following with neutral interest:

The yield on the 91-day Treasury bill now pays next to zero. My question -- why is BIG MONEY so bearish that they are willing to "warehouse" their billions of dollars in T-bills with literally NO RETURN on their money? Why are billions of dollars sitting in T-bills at zero return, just because T-bills enjoy the full faith and credit of the US government. Big Money isn't stupid. If it is so fearful of the situation that it is willing to receive nothing on its money, you have to ask the question, what is big money so afraid of?

--Richard Russell Dow Theory Letters (12/12/08)

PK: While it is unusual that rates are so low, the reason is that people want safety and liquidity and are prepared to settle for no return on their money for that comfort and security.

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From Shelley:

A science blog that was talking about a new utility visualization tool said this and I thought it perfectly stated a financial principle so simply:

I’m pretty sure that the main reason people use a lot of electricity is similar to the reason so many people get into debt… at any given point, they’ve got no idea what their current state is. Simply by being conscious of the current state pre-disposes people to being in control of it."

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Finally this from John Maudlin’s highly respected free financial Weekly E-newsletter which goes out to about a million people:

As an aside, if it looks like Bernanke and Paulson are making all their policy moves "on the fly," it is because that is exactly what they are doing. As would any person in their respective offices. There is no playbook with a set of standard policies and procedures that can be used in case of a credit crisis. They have to make up the plays as the game progresses, much as we did in pick-up football games as kids. "John, go long and make a left cut at the trashcan. And try not to drop it this time."

There are very few real rules and laws, and Bernanke and Paulson have shown a willingness to ignore them if they seem to get in the way. This is a very pragmatic group that is trying to keep the economy from imploding. They only have a few theories and some loose analogies to what happened in Japan and maybe the US in the 1930s as guidelines. But those times had such major significant differences that it is hard to make a direct inference as to what did and did not work. As Yogi Berra is alleged to have said, "In theory, there is no difference between practice and theory. In practice, there is." And when theories meet the rough hand of the market, they will be changed.

We are getting to ready to run a grand experiment on many theories in the world of economics. Will Ben and Hank (soon to be Tim) get it precisely right? And what is precisely right? Does the avoidance of a second Great Depression mean success? Will anyone be grateful? We all have seen pictures of Paulson looking so very tired and worn. I actually feel sorry for him. Who would want that job? I know this will not sit well with many readers, but I think he has done about as well as could be expected given the circumstances. Compared to so many Treasury secretaries over the past 30 years, we are lucky to have Paulson at this time.

In any event, Paulson is pouring water on the fire as fast as he can. I doubt that Tim Geithner will do any different. If Geithner has a playbook for avoiding deflation and depressions, he has not shared it with anyone. They will still be making the plays up as they go along next year. I just hope they call the right plays.

Tithing is about placing God first in your life. Being a joyful giver is a great part of loving the Lord with your body, mind, and Soul.

(From God Is Your Partner by John-Roger, DSS)

I have been speaking about tithing for almost 25 years. From the outset, I have maintained that tithing is the best investment of money that anyone could make. It has been very gratifying to see people embrace tithing wholeheartedly and reap the multifold and multi-level blessings that come with joyful giving and having God as a Partner. It certainly takes the stress and the struggle out of life. Yes, you really can relax when God is truly your Partner. If you can’t relax with God taking care of you, when can you relax? We’ll talk more about that tomorrow.

So you give to God through tithing, you keep a money magnet, you seed, you Grace Tithe—where do you put what’s left over?

First, this is from The Economist (12/6/08):

Where have all your Savings gone?

Investors may draw the wrong lesson from history. For American and European savers it has been a lost decade. After two booms and two busts, stock markets have earned them nothing, or less, in the past ten years. Low interest rates have made bonds and bank deposits unrewarding too. Were it not for the tax relief they receive, contributors to personal pension plans would have been better off keeping their money under their mattresses. It will be little consolation to Westerners that savers in Japan have known this empty feeling for far longer.

This year's figures are enough to put anybody off saving. American mutual-fund assets have declined by $2.4 trillion - a fifth of their value - since the start of 2008; in Britain, the drop is more than a quarter, or almost 195 billion. The value of global stock markets has shrunk by maybe $30 trillion, or roughly half. These figures put the losses on credit-related securities - where the financial crisis began - into the shade.

Nor has the bad news been confined to equities. This year the value of all manner of risky investments, from corporate bonds to commodities to hedge funds, has been clobbered. The belief that diversification into "alternative assets" could prevent investors losing money in bear markets has proved false. And of course housing, which many people counted on for their retirement nest-eggs, has lost value too.

As a result, saving seems like pouring money into a black hole. Any American who has diligently put $100 a month into a domestic equity mutual fund for the past ten years will find his pot worth less that he put into it; a European who did the same has lost a quarter of him money.

William Gross at Pimco, one of the more respected financial managers and advisors, has this to say:

My transgenerational stock market outlook is this: stocks are cheap when valued within the context of a financed-based economy once dominated by leverage, cheap financing, and even lower corporate tax rates. That world, however, is in our past not our future. More regulation, lower leverage, higher taxes, and a lack of entrepreneurial testosterone are what we must get used to – that and a government checkbook that allows for healing, but crowds the private sector into an awkward and less productive corner. Dow 5,000? We don't have to go there if current domestic and global policies are focused on asset price support and eventual recapitalization of lending institutions. But 14,000 is a stretch as well. One only has to recognize that roughly 20% of bank capital is now owned by the U.S. government and that a near proportionate share of profits will flow in that direction as well. Better to own corporate bonds than corporate stocks, but that's a story for another Investment Outlook.

And this is from Richard Russell revered 80 year-old advisor who has been writing the Dow Theory Letters for 50 years:

The question most asked by subscribers is --"What should I do with my money?" This is the single toughest question of the day. A year ago the answer might have been "try to slip it in with the Harvard endowment fund; they're making a bloody fortune with their unorthodox mix of investment." Wait, that didn't work. Harvard with their crack team of money managers lost 22% or $8 billion in the first four months of the fiscal year. Now they're trying to sell some of their illiquid exotic investments.

OK, how about putting some of your cash with the world's smartest investor, "The Omaha Oracle," good old Warren Buffett. Good thing you didn't. Berkshire Hathaway closed at $147,000 on September 15. Yesterday Berkshire closed at $92,823, down 36%. Oh well.

I guess maybe the best thing to do is buy 3-year T-notes and maybe some shares of ED. That's Consolidated Edison (ED) that yields 6% and raises its dividend every year. I also like Southern Company (SO) which pays 4.74% in dividends.

Frankly, it's just not easy to know what to do with money today. Maybe buy a bargain piece of real estate (and there are bargains out there). Then if everything else goes to hell, at least you'll own a real, tangible asset. If you own your real estate free and clear, you've got something solid and tangible. The dollar can collapse and be worth zip, but that house you bought will still be standing (unless there's a fat mortgage on it).

How about some AAA-rated muni bonds from your own state? (And make them General Obligation Bonds) Can your state go belly up? You can always put all your spare cash in a foreign currency, but that can be risky too.

If your money resources are thin, you can buy a CD and maybe receive upwards of 4% on your money. Of course, that's not very much, and then we still have to deal with inflation.

In all the above, I still haven't answered the question, where do we put our money? To tell you the truth, I haven't come up with the ultimate answer. Be diversified. Cash, physical gold, be ready to buy a few assorted stocks if the Averages better their preceding peaks.

So there you have it. Bottomline—no one really knows. But it is good to keep yourself as informed as you can. Still, if you kept your money magnet in gold or in cash, it should be intact.

In this house of mirrors
you see a lot of things –
Rub your eyes.
Only you exist.

--Rumi

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Zen Moment of the Day

An old Chinese Zen Master once said, "Some of you are taking me literally when I say, 'Don't think,' and you are making your minds like a rock. When I say not to think, I mean that if you have a thought, think nothing of it."

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Nice post from The Wisdom Journal on "Money is 100% Emotional." Here is a quote:

If you’re constantly worried, if you’re constantly thinking about finances, if you’re always on the defensive and losing sleep over whether you’ll “have enough,” or whether you’ll “lose it all,” you need to sit down and redefine your relationship with money.

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Remember that everything around you, everything in your life, and everything about you is there so you can use it for upliftment learning and growth. It’s all designed that way. Perfect design. When you’re on to that, your life is full of grace.

Spirit itself lives in the inner consciousness.
Its voice rings in the stillness of your heart.
Its movement is in the perfect stillness within.
Its greatest expression is in the peace and loving
that reside at the core of your beingness.

When you are attuned to Spirit,
there is nothing in the outer world that matters.
Even your negative thoughts and emotions don't matter.
They have no power at all in the presence of Spirit.
The negativity of others does not matter.
There is love and forgiveness –
for everything and everyone.

The more you are loving,
the more you free yourself
to experience the Soul.

(From the Tao of Spirit by John-Roger, DSS)

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So how did all this consumerism start?

Marjorie located this for us (from: www.answers.com/topic/consumerism):

"Economic historian Don Slater has said that the 1920s marked an ideological milestone in the progression of consumerism. Mass advertising of new products heralded them as the key to modernity, and consumers embraced the idea. Advertising implied that "consumerism itself [was] the shining path to modernity: [it] incited [the] public to modernize themselves, modernize their homes, their means of transport." Indeed, Slater sees in the consumerism of the 1920s a "double face," one which shows mainstream middle America embracing consumerism as a path toward security and contentment and a radical youth/flapper culture embracing it as a license for pleasure. For whatever sector, sociologists would argue that 1920s consumerism pointed both groups away from the carnage of World War I.”

So there you go. It certainly wasn’t part of the Founding Fathers’ culture. One thing is for sure with 70% of the U.S. economy driven by consumers it isn’t going away. Not that it is all bad, far from it, but I think we can all agree that it has been overdone.

Joe Surowiecki in his New Yorker blog suggests that the U.S. government is going to subsidize credit-card lending. Great, that’s all we need.

Given the magnitude of the crisis, I’ve been a firm supporter of more government intervention, not less. But what, exactly, is the harm that we’re trying to remedy by making it easier for people to use credit cards? That people aren’t shelling out enough of their money to cover exorbitant interest payments? Are we really saying that the wellbeing of the U.S. economy depends so much on people borrowing money at fifteen to nineteen per cent that we’re willing to spend taxpayer money subsidizing that market? I’m sorry, but there’s no way that’s true.

There’s no doubt that the ability to buy on credit is a great boon to an economy, allowing people to leverage future income streams, smooth their consumption, etc. And the availability of credit undoubtedly encourages consumption more generally, which is a good thing right now. But there is no evidence that the credit-card market as a whole has ground to a halt. (I got four offers for new credit cards in the mail today.) And if it has become more difficult for risky borrowers to get or use credit cards, that’s not in the long run a bad thing, either for them or for the economy as a whole: one of the things the economy needs is for risk to be more accurately priced. There are lots of things the government can and should be spending its money on to get the economy moving again. But on any list of those things, subsidizing credit-card issuance has to be right near the bottom.

And apologies to General Motors, I read that they are, in fact, developing an electric car. I guess what I was trying to say in yesterday’s post is that the company will start to do a lot better when they begin to make consistently good cars.

BEIJING — A noxious cocktail of soot, smog and toxic chemicals is blotting out the sun, fouling the lungs of millions of people and altering weather patterns in large parts of Asia, according to a report released Thursday by the United Nations.

The byproduct of automobiles, slash-and-burn agriculture, cooking on dung or wood fires and coal-fired power plants, these plumes rise over southern Africa, the Amazon basin and North America. But they are most pronounced in Asia, where so-called atmospheric brown clouds are dramatically reducing sunlight in many Chinese cities and leading to decreased crop yields in swaths of rural India, say a team of more than a dozen scientists who have been studying the problem since 2002.

Regardless of the arguments for and against Global Warming, empirically the environment really is a priority.

You can return to the Beloved on your breath, on your gratitude, on your loving, and on your unconditional giving. There are many ways into the Beloved when you are prepared to let go and let God. Your reward will be the enthusiasm you have for your life regardless of your circumstances. You will walk in Grace. And the Grace of God did not say for one moment that you wouldn’t have any pain, or that you won’t meet any adversity. Its only promise is that you are going to live in the Spirit while you walk through this world.

(From: The Rest of Your Life by John-Roger, DSS, and Paul Kaye)

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One of the more extraordinary things that I have heard was when George W. Bush, in the wake of 9/11, told us all to “go shopping.” More recently he gave us our own money back in a Government stimulus package which was aimed for one purpose—for us to go shopping. As some cynics have pointed out, not completely erroneously, we got money from the Government so we could buy Chinese goods, so that they then could lend it back to us, so we could then afford to pay unfriendly countries for their oil.

In actuality, none of this is surprising when you consider that 70 percent of the U.S. economy is consumer driven. In other words the economy depends on us spending money on things. Now some things we need, food for example. But a lot of things we don’t. In other countries they save money. In the U.S. we don’t. Consumerism is built into the American psyche. Indeed, in his bestselling book Dumbing Us Down, award-winning educator John Taylor Gatto argues that our current education system is designed to make us into compliant consumers.

How we got into all this is beyond the scope of this blog. How we are getting out of it is the drama unfolding before our eyes. Are we learning? I hope so. But if we really learn, as a nation, to live within our means, then that is going to mean that the U.S. is going to be turned upside down. So Light to all that. I have had my dealings with the I.R.S. and while everything turned out spectacularly well, thanks to grace, I can tell you that basically they are unforgiving. The Government encourages you to spend as much as you can, but do not depend on them to help you out when you enthusiastically take their advice.

But we will leave the world to unfold as it must. The approach of this blog is to live our lives in accordance with our values, spiritual and otherwise, and spend our money in accordance with those values.

Giving to God is the first step--that opens the channel. The money magnet is the second--that gets the very important relationship with the basic self on track. Gratitude is a major key to feeling, living, and representing the fullness. Living within our means engages the conscious self. Seeding, the fast way to personal abundance, brings in the High Self. We then tap into the endless supply of our Source, and Grace Tithe on the overflow we experience.

The path to abundance has been clearly laid out for us, all we need to do is walk it—lovingly.

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Frugal Tip of the Day from The Simple Dollar. Great post on what his readers have found to be their "25 Best Actions for Saving Money." A really good read.

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And Very Short List gives us good reason for paying off more than our minimum payment on our credit cards.

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Financial Quote of the Day

But the U.S. economy has now lost jobs ten months in a row, while wages and incomes have been stagnant, all of which suggests an economy that’s basically been in neutral or heading backwards for almost a year now. In other words, one could make a case that we’re well into the recession rather than near its start. Normally, that might make you think we’re also closer to the end than the beginning. But the worrisome thing about this downturn is that the bottoming process may be a long and drawn-out one, rather than anything resembling a quick snapback. Which is yet another reason for the government to think bigger when it comes to a new stimulus package.

You don't have to pretend to be anything. You can just be ordinary. You can just breathe your air in and breath your air out.

You don't have to dramatize. Just be ordinary. That is the prior condition to the energy that you have conditioned. That's spiritual. YOU can't do it. IT does it.

The reason you can't do it is because as soon as you put your mind to it, you condition the energy, and then you can't have it. And as soon as you feel it, you've conditioned the energy, and you can't have it.

So you say, "Well, I might just as well let go and let God." That's right. There's not another way you can get it.

(From The Tao of Spirit by John-Roger, DSS)

For some reason, this whole financial meltdown business and the change in the mood of the country has been making me feel very ordinary. It’s nice to know, from and MSIA perpsective, that it’s a good thing. It’s a wonderful time to re-set, and renew the values I live by, to take stock of the things that are really meaningful to me, and make sure I do what is most important. And to look carefully and see if the way I spend my money reflects those values.

I am going to begin a series of posts re-looking at our finances and their relationship to our values. Of course the first step is knowing what our values actually are. For example, one of my core values is simplicity. Perhaps you can start to write down what yours are. Start with your five main ones, and feel free to share.

(The dictionary defines values as: One’s judgment of what is important in life. The principles a person lives by.)

Frugal Tip of the Day:

Check the air filter in your car

I didn’t even know I had one, and when my mechanic, Jim Matson, said I needed it changed, I just shrugged and put it off. A month later I read in the Wall St Journal that a dirty filter substantially affects a cars mileage--by as much as 10% I checked and sure enough my mileage was lower by 10%. I drove over to Jim’s immediately to get it changed.

Smile/Zen Moment of the Day:

Be here now.
Be someplace else later.
Is that so complicated?

(From Zen Judaism by David M. Bader)

This is a big one. Financial Comment of the Day:

In the last forty years, as relative wealth and freedom have improved, the birth rate has declined. The situation where fewer numbers of working people have to pay the pensions of increasingly large numbers of retirees is simply untenable. However politically unpalatable it is for governments to deal with, there is simply no way future pension liabilities can be paid for under the current system. This probably means that some mix of measures such as smaller pensions, higher taxes, later retirement ages and greater immigration will have to be implemented, and adhered to, in order to deal with this issue.

Tithing is a way of saying, “God, pour forth whatever blessing You have for me.” God is health, or lack of disease. God is always at ease, always present, always now, and is constantly creating and expanding.

(From: God Is Your Partner by John-Roger, DSS)

I love to measure things. My breakfast alone consists of about a dozen carefully measured ingredients. So it’s natural that I would want to find a measure for wealth. If I look to dollars to measure my wealth, I might as well pack up my marbles and go home now—the volume just isn’t there at this point in my life.

Still, I feel extremely abundant and wealthy. So how do I measure it? Happiness is difficult to measure and seems to fluctuate too wildly to be reliable. But one thing is a constant in my life and it is what I use to measure my wealth--my blessings. I can truly count my blessings, and when I do I am wealthy beyond measure.

Money has its place in our world and must be handled responsibly, but it is not something I look to for wealth. Perhaps you can start to count your blessings, even write them down and see how wealthy you are. It also immediately puts the times we are living into the correct perspective.

The true harvest of my life is intangible -
a little star dust caught,
a portion of the rainbow I have clutched.

--Henry David Thoreau (Thanks to Lisa Boone’s Heart-thoughts for this one)

And in that vein here is the Smile/Zen Moment of the Day:

I shall never forget the picture of him saying his prayers on a bare ledge just beyond the cabin, looking toward the west. He went out each evening alone after supper, and I can see his black silhouette kneeling there. If ever a man exuded a sense of wholeness, it was he. He knelt for a long time, part of the North he had become, of many expeditions by canoe, snowshoe, and dog team, of the bitter cold and near starvation, but also of the serenity that comes when one knows he has given all and asked for nothing.

Serenity comes from wholeness, and one finds it in strange places. Once in a large city, while I was riding a subway, a woman took a seat just opposite mine. She was neither young nor old, but for some reason the profile of her face struck me, and it was not until she turned and smiled briefly that I saw the serenity in her eyes. I wanted to talk to her but did not dare, and although this happened many years ago, I have never forgotten the look on her countenance. She got off shortly and I watched her go with regret, but her serenity left itself with me. What gave her a sense of peace and wholeness I shall never know.

Sigurd. F. Olson from Reflections from The North Country

Still no one knows. Financial Quote of the Day from Floyd Norris, the chief financial correspondent of The New York Times. And if he doesn’t know....

Now we have hedge funds, which have accumulated, without regulation or disclosure to anyone, huge positions with high leverage. The rumors say they are being forced to dump, further depressing prices. Are the rumors true? Who knows? How much more selling do they have to make? Another good question.

In case you missed it, Nathalie shared this great comment in yesterday’s post:

I had a sharing with John Morton about 14 years ago. I told John that I could not afford to tithe. He answered "pay god first". He then said that everything would change for me. Miracles happened within a year or two I was given a car and a new apartment. The greatest blessing however was the inner feeling of abundance that has stayed with me. I always tithe first, before paying my bills and its always 10 percent.

Speaking of comments, it is an essential part of blogging. Your input is so valuable and it is very easy to comment. Just go to the bottom of any post and click on where it says “Leave Your Comment” and fill in the brief form. As you share your experience all of our knowledge grows.

I’d posted about the magic of percentages the other day and today, at the Ministers Meeting in Los Angeles, I shared that percentages can work for or against us. They work for us tremendously over time when we compound. For example $5,000 invested each year at 10% with the interest being added in yields a tremendous amount at the end of 20 years. Where they don’t work for us in when we are paying the interest instead of receiving it.

The National Debt is an example of compounding in reverse, and boy is it exploding upwards! More relevant for each of us is the interest rate on our credit cards. I mention this because in the last month I have heard of two examples of credit card companies raising their interest rates for no reason and without warning. It really pays to watch and look at your bills and statements.

As mentioned before, tracking your finances is an absolutely essential part of managing your money and builds a solid foundation for practicing the spiritual principles of abundance and prosperity. All we are essentially talking about is awareness. Being aware of how you are spending you money. Being aware of whether you are living within your means. Being aware of what expenses you can cut should the need arise. Being aware of where your assets are and in whose name.

Sounds obvious, but you won’t believe the numbers of people not doing the above. I was at a very intelligent friend’s home a couple of years ago, and she took her unopened bank statement and threw it in the trash. Forget about the security risk, she didn’t even look at it! Yesterday I got a call from a long time MSIAer who lifetime savings were down to zero. She didn’t even know what her money had been invested in! And I have heard many stories of people being unwilling to look at their investment statements in this downturn.

This is one of the lessons of the financial meltdown (I’ve stopped calling it a crisis), no one knows the extent of it—even now! Well, maybe it IS a crisis! (This is a very exclamation point heavy post). No one was paying attention. Yes, they get to walk off with golden parachutes for not watching, but we don’t. So it is essential for us to be aware in order to have an edge on this increasingly tough game. And tracking is the best awareness process I know.

In Dokusan (private interview), a student repeated something that Suzuki Roshi had said in a lecture.

Suzuki shook his head.

“No?” the student asked, “but you said...”

“When I said it, it was true,” Suzuki answered. “When you said it, it was false.”

-- To Shine One Corner of the World: Moments with Shunryu Suzuki
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Financial Quote of the Day (From frugaldad.com):

"So how does one ultimately decide whether or not to invest in the market, or in cash? The answer lies in determining your tolerance for risk. If you are a risk-taker, and have time on your side to ride out some of these short-term storms, then you are probably safe to invest in the market. However, if you are not a big risk-taker, or are already nearing retirement, cash may be the most attractive option. Of course, you may miss some growth when the market rebounds, but at least your capital will be relatively safe in the short-term."

I got a call on Friday from a long time MSIAer who was asking for some friendly advice. This person had done a budget and had come up with a surplus. I was delighted to hear that they had done a budget. However, they didn’t know why they had come up short of money this month, hence the call to me.

My first question was whether they were tracking their finances? Their answer was, “No.” Problem solved, but not resolved.

It’s great to do a budget but even better is to track your finances because it lets you know what is going on. With information you can make intelligent decisions. Otherwise you are flying blindfolded, making emotional decisions. There is no need to live this way as it is super easy these days to track and compute your finances thanks to user-friendly programs such as Quicken. (Leigh Briggin and I cover this in detail in our free online course on this site). I felt funny about recommending Quicken as it was going to cost money and this person was calling me about being short of it. So I did some searching on the Internet.

There appears to be an excellent free money management and tracking site. Go here and check it out. I haven’t tried it myself but it has had good reviews and it got PC Magazine’s Editors’ Choice Award.

A more detailed review is here on Blueprint for Prosperity. Take the time to read the comments on the post. To quote, “The biggest reason why you don’t have to worry about fraud or identity theft is that they don’t ask for or store any of that information. You never provide your name, address, date of birth, social security number or other personal information.” Despite this assurance there is always a risk somewhere with something when you are on the Internet. However, if you are looking to track your finances, I think it is worth checking out, even if it stimulates you into buying your own software.

I cannot stress this enough: if you want to know what is going on with your finances you must track what you are doing with your money.

If anyone has some experience of using Mint.com, please share it with the group in the comments section. Leigh Briggin, any thoughts?

“In times of crisis, those with psychological fortitude discover opportunities that most people miss. A friend of mine in Houston tells me of unending piles of tree limbs broken down by the hurricane. The homeowner laments his disaster; the tree trimmer and the roofer order a new Mercedes. Most of the world sees a Wall St. meltdown. Buffett takes the opening to deploy billions from his cash hoard. They're all seeing the same thing, but they're reacting differently based on different visions of the future.” John Maudlin “Outside the Box”

Frugal Dad (www.frugaldad.com) looks at what we have learned from the Government’s bailout plan and suggests maybe we should do our own personal bailout, “After all, many of the problems on Wall Street could have been avoided if bankers and government regulators had applied the same common sense approach to money management that many of us out here in the real world apply every day.”

Don’t spend more than you earn. Create a household budget and stick to it. If you don’t have the cash for something then you simply cannot afford it.

Live frugal. If more people lived well within their means there would be no need for this proposed bailout. Now days everyone needs a bonus room, home office, double garage on a one acre lot. To finance this “American Dream” many people leveraged their financial future borrowing over half of their income to support a house payment they really couldn’t afford.

If you have debt, pay it off and fast. There are various ways to pay off debt, but at the heart of all the plans is the basic idea that if you live on less than you earn you will create excess money that can be applied to your current debts. That’s really all there is to it.

Create an emergency fund. With debts paid off, and living a frugal lifestyle, savings should be your next priority. Build a healthy emergency fund of 6-12 months of expenses–the more the better.

Don’t suffer a spending relapse. The government does not get the idea of an emergency fund, because in their mind a surplus is simply money unclaimed by a new spending plan. Do not repeat their mistake–keep money in your personal surplus set aside for emergencies and keep your spending in check so you don’t have to dip into these savings to finance bad habits.

In some cases the best form of education we can receive is to be provided examples of how not to do things. The poor money management lessons from our Congress are a great example of this type of negative behavior modeling. Whatever you do, don’t follow their lead with your own finances.

The Soul will evolve and grow, even in the most adverse situations. I've evolved more in adversity than I ever did out of blissful love.

(From Forgiveness, The Key to the Kingdom by John-Roger, DSS) And thanks to Lisa Boone’s Daily Heart-Thought LISA BOONE moonbeamboone@yahoo.com

Everything has its season, and every season prepares for the next. Looking on a winter landscape, everything appears dead, yet more is going on. Winter is a resting point, a time of inner transformation. As author Edna O’Brien puts it, “In a way winter is the real spring, the time when the inner things happen, the resurge of nature.”

We as humans have our cycles, too. Many years ago J-R suggested we follow and track our Biorhythms, our emotional, mental, and physical cycles, as a way of understanding ourselves. I have found looking at seven-year cycles very helpful. If you look at your life at 7 years-old, 14, 21, 28, etc., you will undoubtedly notice that these were times of major change in your life. We need not feel ourselves a victim to the cycles of change anymore than nature would see itself as a victim of winter.

Economies too have their cycles from an expansionary phases to recessionary ones. A recession is a temporary period of economic contraction, where trade and industrial activity are reduced and consequently higher unemployment arises. It looks like that we are coming upon the recessionary phase. Some would say we have been in it for a few months.

That means we need to get through this period as best we can and prepare for the next expansionary phase. Warren Buffett, arguably one of the greatest financial minds ever, thinks this recession is going to be “long and deep.” What does that mean for the dedicated followers of this blog? The answer is at two levels, the inner and the outer.

The inner says there is no lack, and there is endless supply. We continue to tithe and acknowledge God as our supply. Above all we don’t enter into fear or panic. We remain open and grateful seeing opportunity everywhere, and seeding for those opportunities that resonate for us.

One of the most gratifying things for me has been reading your comments and seeing what a source of strength tithing is for you in these times. In addition, we always have our Traveler inspiration to fall back on. “If you want to know God, you tithe.” John-Roger said that. “I tithe, therefore I know God.” John Morton said that. I don’t think it gets more specific and clearer than that.

The outer says we need to use our common sense. We have all the spiritual support we need, now we need to apply our 10 percent level responsibility in a conscious and wise way.

Don’t be concerned, for the Beloved waits for your return. You can return on your breath, on your gratitude, on your loving, on your unconditional giving. There are many ways into the Beloved when you are prepared to let go and let God. Your reward will be the enthusiasm you have for your life regardless of your circumstances. You will walk in grace. And the Grace of God did not say for one moment that you wouldn’t have any pain, or that you won’t meet any adversity. Its only promise is that you are going to live in the Spirit while you walk through this world.
(From The Rest of Your Life by John-Roger, DSS and Paul Kaye, DSS)

I love that quote above. I should repeat it from time to time on this site. It says so much and goes so deep.

A hundred years ago a dollar bill was just not a pretty piece of paper, it could be redeemed for gold or silver. $20 would buy you an ounce of gold. Today you need about $900 to buy an ounce of gold. Over the last 100 years the value of the dollar has declined 96%.

The average income for an American supporting a family in 1900 was around $1,200 a year. A tract house in Alameda County, California in 1900 would sell for around $1,200. Today, you will probably pay in the neighborhood of $600,000. Most land you could buy in 1900 for $1,000 would probably cost you between $500,000 and $5,000,000 today. Bottomline, you could buy a home on one year’s salary back then.

When asked, “What should I do with my money magnet?” the above explains why I recommend gold or real estate, first and foremost. Plus real estate is something you can stand on and something the basic self can really relate to (I am not talking flipping condos, here). Same with gold. Most basic selves love gold.

Cash is of course good, too. But in an environment of inflation, cash loses its value, a little less than 1% a year over the last 100 years as shown above—more if you have been shopping at Trader Joe’s in the last year as my wife and I do—or just shopping for food anywhere. In an environment of deflation cash is really good to have around as it becomes more scarce. Not that real estate and gold don’t have their ups and downs, but as we have discussed in prior posts a money magnet is not to be spent. The bigger the magnet, the more it draws to you. It’s a magnet. The basic self has to relate to it and feel secure about it so it can say, “I want more of this.”

If money can ever be called “real,” gold is real money. It always has been as far back as there are records of this kind of thing. Paper money is well, just that. It’s whole basis rests on confidence. It’s no surprise therefore to find that today’s Financial Times has an article on how hard it is to find gold coins in the current financial environment. People are buying them up like crazy.

So is it going to be inflation or deflation? Since we cannot see the future, it's wise that we hedge our bets. A little bit of cash, a little bit of gold, and if we are lucky a little bit of real estate, that will eventually grow into big bits of all three.

This blog is not an investment advisory or a predictor of economic or political events. We are about principles. Principles that work consistently and stand the test of time. We are about the spiritual principles of abundance and prosperity allayed with solid financial principles, which are practical and based on common sense. To exercise common sense one must have one’s eyes open, so from time to time we’ll be examining the financial climate to see how we might use these principles to navigate through the current economic times. We’ll be looking at this in the next few blogs. If you are just here for the spiritual quotes, be patient, and you’ll find plenty of them in prior posts.

Okay let’s get going. The first thing to know is to not underestimate the enormity of the U.S.A.’s wealth and the power of the U.S. Government. Yes, it is guilty of hubris and yes, it has been severely weakened, and yes, there has been a lack of leadership but that doesn’t mean that the country has been deprived of its tremendous resources and that the government won’t right itself and find a reasonable solution. Strategic Forecasting (www.stratfor.com) put it this way:

Months ago we said that this wasn’t the big one — the crisis that drives the economy to a 1929-style economic crisis. That seems to us clearer than ever. It has been devastating for the financial community, but then other crises have been devastating for other economic areas. That’s the way it goes. It has been frightening for the financial markets, but it was always our expectation that the savings and loan model would repeat itself. As we said, this is not the first time a whole segment of the financial community destroyed itself, and it is not the first time the Feds have stepped in. We continue to expect a recession on the order of 2000-2001. The point is that this isn’t going to trigger a great depression in which GDP contracts by almost half in a few years.

We should point out that many have written to us saying that we do not understand the magnitude of the crisis or economics. Perhaps not. But we do understand the magnitude of the U.S. economy and the federal government’s abilities. And that is what those who felt that the entire system was going to collapse simply didn’t get: The sheer size of the economy and the sheer power of the Federal government trump the financial markets every time.

The macro question is where are we heading? Recessions come and go, but is the long term trend deflationary (money tight and scarce, prices go down, sluggish economic actvity), or inflationary (plenty of money being produced and prices going up). Another way of phrasing that in the context of this website is, what do I do with my financial abundance, and what should my money magnet comprise of?

Here is a point of view from Kenneth Gerbino writing at www.kitco.com:

The Inflation vs. Deflation debate is a debate between Knowledge and Stupidity. History and Fantasy. Understanding and Confusion. When a stock portfolio goes from $2 million to $1 million this is in fact a “deflated” value but this does not cause a deflation in the economy. Even with $10 trillion of stock market losses it has little effect on the general price level of goods and services in an economy. The crash of 1987 saw $15 trillion of stock and bond losses in the U.S. An historic loss of asset values at the time. Yet inflation in 1988 and 1989 averaged 3.2% and 4.3% respectively. There was no deflation. The same concept is true for real estate. Real Estate losses in 1990-91 were in the trillions and the inflation rates in 1990, 91, 92 averaged 4% annually. There was no deflation. There never is with paper money.

Do not confuse financial assets, real assets and money ….they are very different animals. The deflation fears are promoted by the banking establishment economists as an excuse to print more money. In a paper money system deflation is basically impossible. Yes, “deflated” prices of assets can take place but that is a market mechanism of asset prices and asset values and nothing to do with a deflation in the economy.

There will be no deflation. Inflation is here to stay as prices have not gone down in this country in any year for the last 60 years despite the calls of the deflationists. During this time, despite market crashes, horrible recessions, and numerous real estate busts we have had no deflations. Paper money is inflationary and we are going to be flooded with more of it before the bailout of the global financial system is completed.

We’ll talk less economics and more practical application about the implications this all has for your money magnet tomorrow.

Well, that was quite a day. A lot of panic out there today. My father called and asked me how I was doing with it all. My response was that I don’t worry about things I can’t control, and that in the financial area I don’t have that much, so I don’t have that much to be concerned about. Nevertheless, there are plenty of people worried right now. If you have been following the spiritual principles of abundance of prosperity, you really do not have anything to worry about. You can relax. You have earned it. Of course that doesn’t mean you shouldn’t have your eyes open as to what is going on. I have included three perspectives below.

The first is practical, how does this all affect your money and what does it all mean in our day to day lives. This New York Times article on Is My Money Safe? should help you out.

The financial newsletter writer Richard Russell who has lived through the Great Depression and fought in World War II, tells it straight:

If the economy is going to improve, it will be up to the government to do the spending. Governments all over the world will have to run up big deficits and increase their spending. After all, what got the US out of the Great Depression of the 1930s? It was the massive spending of World War II that finally turned the US economy to the upside. The giant war effort and related government spending put everybody to work, including millions of America's women. Jobs were plentiful. And now Obama and McCain are competing in promises to CUT government spending! Forget it. To get out of this recession, the US government will have to spend as it never has spent before, along with running trillion dollar deficits. The government will have to embark on a giant "rebuild America program." Our streets and freeways are shot, our bridges are tattered, the US government will have to engineer a massive "make work" program to rebuild America. Unfortunately, as I see it, Washington will be tempted to start another war.

Finally, a thoughtful and philosophical perspective from Michael Lewitt of Hegemony Capital Management.

The problem with trying to legislate in the middle of a revolution is that you aren't sure whether you are governing the world that is being destroyed or the one that is coming into being. There can be little question that the Wall Street that existed at the beginning of this year is no longer the industry that Congress is seeking to rescue from its own excesses. The financial world has been permanently altered by the collapse of the debt bubble that inexorably built up over the past three decades. Now Congress is trying to design a rescue plan for a world whose shape is highly contingent and unstable. Such an undertaking requires more than two weeks of work. Conventional thinking tells us that the government must do something to stabilize the markets immediately, and that doing something is better than doing nothing. Once again, conventional thinking is wrong. Congress would be much better advised to take the extra few days or week it would take to structure a plan that the world is going to have to live with for a very long time.
The great economic historian Charles Kindleberger wrote in his seminal study of financial crises, Manias, Panics, and Crashes, that, "for historians each event is unique. Economics, however, maintains that forces in society and nature behave in repetitive ways. History is particular; economics is general." This is a very important observation. While each financial crisis is unique in terms of its causes and the types of assets that it engulfs, the conditions that led to it are always driven by human irrationality and hubris. Financial busts are preceded by financial bubbles. The current bust was preceded by a debt bubble whose unique manifestations were debt securitization and credit derivatives. Underlying these novel debt structures were the human emotions of greed and fear that led to abuses by even the most sophisticated individuals and most highly respected institutions in the market. While these human attributes are the most difficult to legislate, their ability to wreak havoc is clear evidence that they must be regulated in a thoughtful way.
What is lacking from the public debate is a serious understanding of the difference between treating the symptoms of the crisis and trying to cure the disease. The disease is a total loss of confidence in the American model of debt-engorged free enterprise, and American economic and political leadership. The cure is regaining that confidence.
In his new book, economic consultant David M. Smick writes, "the survival of the world financial system depends on an elaborate confidence game. The size of the financial markets, relative to the governments, has become so monstrously huge there is no other means of maintaining stability than to establish a psychology of confidence. The governments themselves cannot by edict restore order. They can only project to the markets a sense that they know what they're doing."

What Henry Paulson and Ben Bernanke are desperately trying to explain to Congress is that America's leadership must immediately restore the world's confidence in American economic and political leadership. But the Paulson Plan was generated under impossible conditions. Were it to succeed, the best that could be expected at this point is a slow revival of the credit system. To hope for more is sheer folly. It is a certainty that America, and then the rest of the world behind it, is going to experience a severe recession the likes of which it hasn't seen for decades. Moreover, if by some miracle it were to be avoided, it would merely delay the inevitable purging of the psychological and financial excesses that have been piling up in our economic system over the past thirty years. One of the problems plaguing America is that we have become so frightened of short-term pain that we are willing to risk incalculable long-term suffering. Any plan that treats the symptom (the loss of confidence) and not the disease (the underlying problems that caused the loss of confidence) will not solve the real problem.

Whatever your point of view, one thing is for sure, for those of us living in the U.S. one security illusion after the other is being busted, whether it is 9/11, Katrina, or this current financial mess placing our faith in this world is building our house on sand. Thank God for the “rock” of Spirit. Stay tuned.

I refer you to these posts from other bloggers because, let’s not kid ourselves, the game has changed out there and we should be emotionally and mentally prepared.

The spiritual principles of abundance and prosperity, however, have not changed. So now is the time to make sure that you thoroughly understand them and can apply them. Having options is immensely freeing. That’s the purpose of this blog.

First the law: As the powers of the land wrap up the enormous financial mess this country has gotten into, I thought the excerpt below from Strategic Forecasting (www.stratfor.com) brings us up to date and wraps up the matter as far as this blog is concerned.

The U.S. Treasury floated its barebones plan for a $700 billion bailout of the U.S. mortgage market. A final text is expected to be put before Congress for a rapid vote by the end of next week, before Congress breaks for elections. Details of the three-page plan are extremely sketchy, but in essence Congress will authorize the Treasury to spend up to $700 billion to purchase (at prices the Treasury has the market position to dictate) mortgages in various forms of packaging for sale to other interested parties (at costs the Treasury will be able to set) at a later time.

In a stroke this ends this chapter of the subprime crisis. Those assets will now be transferred to the government — the current holders will take whatever loss the Treasury feels is appropriate — and sold back to the market as conditions improve. In the long run this is great for both the housing market and the government — for the housing market because it puts a floor under current falling housing prices and allows America’s positive population growth and net immigration to slowly raise future prices, and for the government because while it will increase debt in the short term, in the long run it will probably earn the government a profit. The Treasury will be aiming to buy low and sell high, and in most cases should be able to, yet it has the authority to raise its paying prices or lower its sale prices as necessary to ensure that both ends of the market continue to function semi-normally.

But as with the upheaval on Wall Street, this will have a hidden impact. The U.S. Treasury is about to get tossed a fat account with broad powers, but for a project for which it will have full legal and regulatory indemnity. Squeezed into that double-spaced, three-page document the Treasury jotted in that no private entity or government agency could challenge the legal or regulatory basis of its mortgage operations. Add in the burgeoning efforts to clean up Freddie Mac and Fannie Mae and the Treasury now has $1 trillion in projects that no one short of the Supreme Court itself can challenge. Not even Josef Stalin acted with such freedom on such a scale. The next Treasury secretary had better know what he is doing.

--STRATFOR

And Light ahead to that! Which brings us to a bit of grace from Manifesting God’s Abundance by John-Roger, DSS, with a reminder that there are more interesting things in life than materialism.

“Materialism is a strange game. It's caught more than one person and rubbed their nose back into the world time and time and time again."

“Why should we just stop short and just manifest the law, because that means we'll always be beggars. We'll always be trying to manifest our need which then puts us right back in materialism. We become materialistically minded. Manifest the car, manifest the wife, manifest this, manifest that. We're right back in it. What happened to all this spirituality? It is masquerading. So, the manifestation isn't for that of the world, but it is for the awareness of the Beloved that is you inside.”

“And in a state of abundance we must watch we don't get caught in materialism, but that we can supply the abundance of life-giving responses inside of us to radiate out as spiritual energy, as radiant energy, as cosmic energy, and let it lift all around us.”

Talking of budgeting (see yesterday's post), Leigh Briggin and I facilitated a three webclass series called the Spiritual Principles of Abundance and Prosperity, in which we covered budgeting and money management as well as tithing and seeding. Leigh is a Certified Financial Planner as well as a CPA and the clarity he brings to money matters is extraordinary--very clear, practical, and elucidating.

Go to "GOODIES" on the left of this website. A click will take you to "Multimedia." A further click will take you to a screen with Leigh and me. Click on "webclasses" and off you go.

As the country’s money madness continues around us and trillions of dollars are spent propping up financial institutions, with an intensity that has never been seen in either health or education, I have mentioned gratitude as an effective antidote. Another antidote I have found effective is the not so simple act, in our culture at least, of slowing down.

Here are a couple of quotes to inspire you on your Sunday to slow down and take in the beautiful gift of life, in and around us, that we gave been given.

A thousand years ago when they built the gardens of Kyoto, the stones were set in the streams askew. Whoever went quickly would fall in. When we slow, the garden can choose what we notice. Can change our heart.

Jack Gilbert

*

"We believe that we can add meaning to life by making things go faster. We have an idea that life is short--and that we must go fast to fit everything in. But life is long. The problem is that we don't know how to spend our time wisely. And so we burn it.

"Fast food is not our enemy. We can all eat as we want. If we have an enemy, it is the abnormal rhythms in which we are living our lives.

"To be slow means that you govern the rhythms of your life. You are in control of deciding how fast you have to go. Today, you might want to go fast, so you do. Tomorrow, however, you might want to go slow, so you can. That is the difference.

"It is useless to force the rhythms of life. If I live with the anxiety to go fast, I will not live well. My addiction to speed will make me sick. The art of living is about learning how to give time to each and every thing. If I have sacrificed my life to speed, then that is impossible.

"Ultimately, 'slow' means to take the time to reflect. It means to take the time to think. With calm, you arrive everywhere."

We are being told daily that the financial crisis now taking place is the worst since the Great Depression in the 1930’s. We are living in historic times, yet despite my financial training background, the gargantuan numbers involved confound me. Billions and billions of dollars, seemingly coming from thin air, are involved.

If someone has a billion dollars and they give you a million dollars, they have 999 million dollars left. A million dollars is pocket change to them. My first thought is, wow. My second thought is wouldn’t it be nice to have a few billionaires tithing to MSIA! But this crisis has involved trillions! A trillion is 1,000 of the billion mentioned above (one million million! But I am not writing this to fill my post with exclamation marks.

I am not the only one confused. Steven D. Levitt, author of the mega bestselling book Freakanomics is an economist and he doesn’t know what is going on either. So he got his colleagues to explain it to him, and this NY Times article is about as clear as it gets on why this has been the most significant financial crisis in the history of these things. So if you want to educate yourself over the weekend, here it is.

How does this affect us joyful givers? We keep on giving, including giving love to our beloveds, and giving thanks for this day and all the blessings contained within it. Is that being Pollyanna? Yes. And it is also living the spiritual principles of abundance and prosperity. And it’s good for our health, too! (Minus the pretty skirt for us guys).

I've emphasized the necessity of buying only stocks that pay dividends so you're in the compounding game. A stock that pays no dividend is "dead wood" as far as I'm concerned; it does you no good unless it rises. The idea in owning stocks is to get PAID for the risk of owning a piece of a corporation. If the corporation pays you zip for taking the risk of owning it, what good is it? You cannot compound unless dividends are coming in.

In a bear market, stocks that pay no dividends are at the complete mercy of the downtrend. As a dividend-paying stock declines, the yield on that stock increases, and if the dividend holds, the stock becomes more valuable. This is a critical point to understand if you are going to invest. Strong, dividend-paying stocks are better values (as is the case with top-quality bonds) as the stock (or the bond) declines. The corollary is that there is no more desirable stock than a stock that boasts a long record of increasing its dividend year after year.

Studies show that dividends contributed as much as 50% of the total return on the S&P since WW II. The almost magical power of compounding can only be seen by holding stocks and reinvesting the dividends over the years.

2. Money and Romance

A great article if you didn’t see it this week from the New York Times on the importance of financial compatibility when choosing a partner. I can vouch for the wisdom in this one from personal experience. And, no, I am not bitter.

Social scientist Dalton Conley, writes below, on how rich people are now working longer hours than poor people in America.

This is a stunning moment in economic history: At one time we worked hard so that someday we (or our children) wouldn't have to. Today, the more we earn, the more we work, since the opportunity cost of not working is all the greater (and since the higher we go, the more relatively deprived we feel).

In other words, when we get a raise, instead of using that hard-won money to buy "the good life," we feel even more pressure to work since the shadow costs of not working are all the greater.

The increasing income inequality in the US is partially to blame, says Conley. Those in the middle and upper middle classes are working harder and longer, trying to keep up with the Joneses who are growing more wealthy at an even faster pace.

Conley's got a book coming out in January on the same topic called Elsewhere, USA.

2) The Science of Happiness

Highlights, below, of an article that will appear in this Monday's (9/8) Los Angeles Times.

If recent scientific research on happiness -- and there has been quite a bit -- has proved anything, it's that happiness is not a goal. It's a process. Although our tendency to be happy or not is partly inborn, it's also partly within our control. And, perhaps more surprising, happiness brings success, not the other way around.

"Many of us have material things and our basic needs met, so we are looking for what comes after that," says Ed Diener, co-author of the forthcoming "Happiness: Unlocking the Mysteries of Psychological Wealth." "Materialism isn't bad. It's only bad if we use it to replace other things in life like meaningful work, a good marriage, kids and friends. People are recognizing that those who make money more important than love have lower levels of life satisfaction."

Among the major findings of the last decade is that the pursuit of happiness is a worthy cause, Diener says. "Happiness doesn't just feel good. It's good for you and for society. Happy people are more successful, have better relationships, are healthier and live longer."

Sonja Lyubomirsky, a professor of psychology at UC Riverside, has led controlled studies to determine what behaviors positively affect happiness, and has come up with at least 12 strategies that measurably increase levels. For instance, one strategy she's tested is the practice of gratitude. She and other researchers also recommend practicing forgiveness, savoring positive moments and becoming more involved in your church, synagogue or religious organization.

Lyubomirsky and her colleagues analyzed studies on identical twins and other research and came to the conclusion that happiness is 50% genetic, 40% intentional and 10% circumstantial. "Half of your predisposition toward happiness you can't change," she says. "It's in your genes. Your circumstances -- where you live, your health, your work, your marriage -- can be tough to change. But most people are surprised that circumstances don't account for as much of their happiness as they think."

Life circumstances don't result in sustained happiness, she said, because we adapt. That new car, promotion or house feels great at first. Then we get used to it. An old but often-cited study found lottery winners were no happier than control groups after a year. That doesn't mean that getting out of a bad job or a terrible marriage won't give your happiness a boost. But sustaining that good feeling requires something else: deliberate control of how you act and think. That's the 40% intentional part that Lyubomirsky and others are most interested in.

What happiness isn't, Diener adds, is getting everything right in your life. "A man might think, 'If I get the right education, the right job and the right wife, I'll be happy.' But that's not how it works. For instance, once basic needs are met, the effects of income on happiness get smaller and smaller. That's because happiness lies in the way you live and look at the world.

"If you have no goal other than your personal happiness, you'll never achieve it. If you want to be happy, pursue something else vigorously and happiness will catch up with you."

Richard Russell writes the Dow Theory Letters the longest running private letter investment advisory. He's been doing it for over 50 years and he is 84 years-old. So he has some experience and I thought it worthwhile to share with you his thoughts on what he has learned. While this isn't exactly the spiritual principles of abundance and prosperity it is practical information on the use of money. Over to Richard Russell:

Anyway, here are a few of the things that I've learned.

There's only one guaranteed repository of wealth. It's called gold. Gold has no counter-party risk, gold needs no guarantee from any government or central bank. Gold is not an investment because gold pays no interest or dividend. Gold is eternal wealth on its own; it has been so over the ages.

Cash should be respected because cash if you have enough of it, will buy almost anything. Cash is great, but just don't hold too much of it for too long, because it is almost guaranteed to lose purchasing power over the years.

Debt is okay and often useful during inflationary times (and most times are inflationary under the central bank system). But debt can be a killer during deflationary times (and deflation occasionally does rear its ugly head). Rule -- never take on more debt than you can handle in the event of a reversal or in the event of hard times. In other words, you must be confident of carrying your debt come what may (and occasionally, as now, what comes will put you to the test!).

We have a sign on the wall in our office which reads, "Bet Not They Whole Wad." Its meaning is clear. If you risk all, you can lose all. And if you lose it all, it's very hard to start over again.

The "Royal Road to Wealth" is the process of compounding through time. There's nothing like it. Compounding requires you to be disciplined, to save, and to reinvest whatever interest and dividends come in. Most people don't or can't do any of these three. Those who can, usually end up with more money or assets than they can use. Obviously, the earlier you start a compounding program, the more successful you will be.

From a purely money standpoint, you and I would be better off never reading the newspapers or watching TV. The Newspapers and TV never talk about markets, they deal with the news -- and all news is history. Furthermore, most news plays on the emotions. From a money standpoint, we'd be better off just dealing with the markets themselves. And if we're on the compounding path, we just search for the best stocks that pay the most attractive dividends. We don't even deal with market trends.

In my experience 90% of what you hear from market experts is useless in investing. Most opinions are wrong, and if they happen to be correct and you act on them, you are probably acting too late.

So that's it. I happen to agree with him on compounding, although since it depends on consistency over time, the younger you start the better. It is literally the best advice you can give to a young person regarding managing their money--after they tithe, seed, and do their money magnet, of course!